Last month we announced our financial results and introduced Oikocredit’s updated strategy. Our Managing Director Thos Gieskes shares more details on what’s different about the new approach, why focus is so important, and how social impact remains at Oikocredit’s heart.

Why has Oikocredit updated its strategy?

Oikocredit’s work is crucial and our mission is more relevant than ever. It’s our responsibility to ensure Oikocredit is performing at its best so that we can achieve the greatest social impact.

So, like any successful organisation, we’re adapting to change. But we’re not changing our DNA. We still are — and will always be — dedicated to improving the lives of people on low incomes.

What we’re doing is sharpening the focus of our existing strategy. After conducting a thorough analysis of how we can maximise our social impact we’ve decided which sectors and regions we will focus on.

We’re also looking at organising ourselves more efficiently and expanding our capabilities, both those of our organisation and of our people.

What compelled you to update the strategy now?

If you look at Oikocredit’s success to date, we’ve built it mostly on providing funding and capacity building to partner organisations that no one else was willing to lend to. Now other investors and institutions are providing funding too.

They’ve followed our example, and we’re proud to have created a path for others to tread. But it’s time for Oikocredit to take the next step to help make an even bigger impact in the lives of people our partners serve.

We want to continue adding value to our partner organisations in a way that other investors or institutions simply can’t. We see ourselves achieving this by being the impact investor that truly puts social impact first and acts as a catalyst.

What does being a catalyst mean for Oikocredit?

It means bringing parties together that would otherwise not naturally come together, to create something that’s bigger than the sum of its parts.

We have great examples of where Oikocredit has done this already. Look at the price risk management project we’re working on with different actors to benefit coffee farmers in Latin America.

Because of our global networks, our local partners, our history and our member base, we are uniquely placed to bring different players together to create positive change.

We’re also in a special position because our investors are people with a long-term horizon, geared more towards making social impact than financial return. They want us to use their money for a period of time to make a difference in the world, and that gives Oikocredit a unique approach in putting social impact at the top of the agenda.

What are you aiming for with the updated strategy?

Our ambition is clear. We want to focus on improving the lives of low-income people in areas where need and opportunity are greatest. We want to maximise our social impact while safeguarding the environment and generating fair financial returns.

We want to lead in positive change, to be the preferred social investor and development partner for our partner organisations. We want to offer our investors the chance to be part of a global movement for social change.

To align our organisation with this ambition, we need to make changes to where and how we work. We need to become more focused, efficient and in a stronger position to build on our role as a catalyst.

Increased focus is the biggest aspect of the renewed strategy. This means we’ll no longer be moving in every direction. Instead we’ll carefully select where we have the highest added value.

What changes are being made to where Oikocredit works?

For Oikocredit, Africa, Asia and Latin America are regions where we’re confident we can achieve the greatest social impact.

It’s been a difficult step, but this means that we’re no longer focusing on Eastern European and Central Asia. This unfortunately has implications for staff and partner organisations, and we’ve been working hard to support them through this transition.

We will see through our current commitments, but we’re not making any new investments in Eastern Europe and Central Asia.

We’re extremely proud of what we achieved in this region during the time we’ve worked there. Our people and partner organisations have all done great work and we’ve seen a lot of progress in the region.

We also decided to no longer make new investments in a select number of other countries, mainly in Africa, where we have very few partners and see limited opportunities for Oikocredit at this point in time.

We’re making these changes because it was simply not possible for Oikocredit to continue to work in as many countries as we currently are. So we had to make choices. The choices were based on serious research we’ve done: internally, externally, assessing our past social and financial performance, and trying to project what it would look like in the future.

That’s how we know that Africa, Asia and Latin America will be the regions we’ll focus on going forward. This concentration will help us amplify the positive change Oikocredit’s work creates.

What can you tell us about the focus sectors?

We will continue in the sectors of financial inclusion, agriculture and renewable energy, which are where we have the most expertise. Also, we will focus even further on these areas to ensure that we’re maximising our social impact. And as always, following through and staying committed to our decisions is required to warrant a successful execution of any plan. This implies that we will not finance any other sectors outside of the focus areas.

In financial inclusion we’ll deepen our engagement with our microfinance partners and banks providing loans to small and medium-sized businesses to help them expand their value proposition. We’ll also seek partnerships beyond traditional financial institutions, for example with fintech companies that target underserved communities with innovative financial technologies.

Agriculture is a sector that differs throughout the world, but we will focus on key crops in each region. Within that focus we’ll use our expertise to best support our agriculture partners and the smallholder farmers they serve.

In renewable energy, we’ll focus our investments where there are clear benefits for local communities and where Oikocredit can add real value. We’ll put a stronger focus on projects that generate maximum social impact, in particular off-grid solar, selective on-grid infrastructure projects and clean cooking.

What are the next steps?

First we want to implement the focus plan throughout the organisation. This will help us greatly in accomplishing our mission in an effective way.

Then we will look into the best ways to reduce complexity and increase efficiency in our organisation. We want to be sure we’re making the best use of our resources.

We believe being close to our partners through a network of local offices is key and differentiates us from our competitors. We’re evaluating how we can enhance this set-up to better serve our partners, both via our local offices and at our central office.

Achieving focus and reducing complexity is a process we want to complete in the short-term, but maintaining focus is a long-term commitment. It’s part of continuously striving to maximise our social impact and the value we can add as a catalyst.

Our long-term vision is for Oikocredit to be flexible and agile. That way we can continue to respond to changing environments and to the needs of the people whose lives we aim to help improve. Naturally this means we will continue investing in our people, processes and systems.

The ultimate goal is to be the social investment organisation of choice for our investors, for our staff, for our partners and — most importantly — for the low-income people our partners serve. It’s a goal I think we can all feel inspired to work towards.